As Goes Starbucks (SBUX), So Goes McDonald's? (MCD)

McDonald's (MCD) reports earnings this Wednesday, July 23rd, and
shareholders are worried about espresso sales. Now that
Starbucks (SBUX) is closing 600 stores, this probably isn't
the best time to be in the luxury coffee market. And the current
data available isn't helping MCD's cause (WSJ):

McDonald's sales data suggest that these specialty coffee drinks,
now in at least 1,700 locations, aren't selling well. A chart of
the six major areas where the company is selling the drinks shows
that sales in most markets peaked about three weeks after the
drinks launched, then declined in the following weeks, in some
cases sharply...

In Kansas City, Mo., for instance, the average number of
specialty coffee drinks sold per restaurant peaked in early
December at 359. As of the last week in June, that average had
fallen to 217.

If McDonald's new coffee drinks fail, we can already hear their
defense:

Hot drinks don't sell well in the summer.

Just wait until we start marketing!

Once gas comes down, the drinks will sell like hotcakes.

The new beverage-counter renovations may be expensive, but
wait until next quarter...when we'll have less Starbucks to
compete with!

MCD has remained resilient in the face of a recession as
consumers trade down because of its cheap prices. So
unfortunately, McDonald's may have picked the wrong time to go
upmarket.